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Stocks lower on weak Chinese data

David Russell (david.russell@optionmonster.com)

Stocks are drifting lower today after weak economic news from China, but retail sales later this morning could change that.

S&P 500 futures are down about one-third of a percent, following declines of a similar magnitude in Europe. Most Asian markets were lower, though Japan's Nikkei continued its blistering run with a gain of another 1.2 percent.

China's fixed-asset investment slowed while industrial production missed forecasts. But the big headline of the day comes at 8:30 a.m. ET, when the Commerce Department reports retail-sales data for April. Economists predict contraction of 0.3 percent, compared with a negative 0.4 percent reading the previous month.

The S&P 500 closed at another record level on Friday and has climbed in 13 of the last 16 sessions. Money has been streaming into the equities amid signs that the world's economy is recovering and as years of bias toward fixed-income investments ends.

This week's calendar keeps the focus on the global picture, with Germany's Zew survey of financial sentiment and European industrial production scheduled for tomorrow. Corporate-earnings season is mostly over.

Price performance in the last week also suggests that sentiment is turning more bullish as aggressive sectors such as transports, small-caps, industrials and consumer-discretionary stocks outperform the S&P 500.

Foreign-exchange trading paints a modestly bearish picture, with the Japanese yen higher and currencies associated with growth such as the Australian and Canadian dollars lower. The euro, however, is climbing slightly against the U.S. dollar. Oil is down about half a percent but is rebounding from earlier lows. Copper is little changed, precious metals are mixed and agricultural foodstuffs are mostly higher.

Airlines may be active today after a France reported a new case of the potentially fatal coronavirus, which first appeared in Saudi Arabia. Major airline stocks are down more than 4 percent in Europe on worries a general outbreak will hurt travel.

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